Utilizing e-Tendering in the Procurement of Construction Projects

*Nnadozie Godswill Ndubuaku and Godson Jerry*

### **Abstract**

The growth of any developing and even developed country can be traced or ascertained by the myriad of standard, sophisticated, and profit-oriented projects that have been executed and others still under construction. Many countries in the world, especially Nigeria has suffered huge deficit in the procurement of construction works, since the procurement segment of the construction industry is the largest segment and, holds the promise of efficient and successful project delivery, coupled with client expectations being met adequately. This book chapter is to address the pitfalls or backdrops in the procurement process, viz.; bulky paper-work, corruption, poor assessment of tender documents, human errors, etc. Therefore, Utilizing the e-tendering system will foster transparency, accountability, proper documentation and also to encourage competitiveness among various class of contractors, which are the main findings in the book. The authors, prepared a myriad of questions that portray the tendency of enhancing quality projects delivery. The authors shared 30 copies of the questionnaires, and the 30 copies were received with feedback. The data filled in the questionnaire were examined, using the SPSS software, that is usually adopted for data analysis. After the results of the questionnaire were examined, it was discovered that all the factors highlighted in the questionnaire were required to be in the contractor's portfolio.

**Keywords:** e-tendering, procurement, construction projects, information communication technology (ICT), tender approach

### **1. Introduction**

Nowadays, the construction industry ranks as one of the most informative-based industries. It is considered as a crucial industry in almost all advanced/advancing nations that are on the trajectory of speedy development. Sadly, the industry has also suffered huge deficit of knowledge in its operations and lags significantly behind in the applications of information communication and technology (ICT), internet of things (IOT), internet of service (IOS), artificial intelligence (AI) big data, and machine learning, which are the main drivers of the fourth industrial revolution. The aforementioned innovative technologies are the disruptive forces, that are rapidly increasing the efficiency and productivity of several manufacturing and non-manufacturing firms in the engineering and management fields. However, the application of these technologies, will enhance the procurement of construction projects and increase visibly, project delivery quality. In recent times, particularly in Nigeria it has been observed by the monitoring and control department of Government projects, that most public or government projects has recorded a lot of lapses in the contracting processes. Consequently, the lapses that have been identified in the contracting process has given rise to the emergence of an e-tendering system, which will promote transparency and accountability among the various contracting stakeholders.

All the contracting stakeholders, whether governments, institutions, an entity, individual or a coalition will be required to carry out their contracts in the e-tendering system. Thus, information of the tender will be published on the e-tendering system in anticipation that tenderer or contractors will view and submit bids for the projects. This will demonstrate positive infrastructural growth on investment, because of the healthy contracting milieu.

The concept of Utilizing e-tendering in the procurement of construction projects is not abruptly dived into, but research shows that, nations like Malaysia and Korea, are Utilizing e-tendering in the procurement of construction projects, which has proven successfully over a considerable period of time, even till date. However, the Utilization of e-tendering in procurement, is to help minimize bulky paper work involved in the tendering process, poor process review, delay in tendering process, high processing cost, and to eradicate corruption. Meanwhile, promoting transparency and accountability, aggressively embracing the applications of innovative technologies in order to gain greater efficiency and cost cutting throughout various institutions and Governments, which are the main rationale of this book chapter. Again, people and the processes involved in e-tendering are likely to impart negatively or positively on its applications or use.

The application of e-tendering, will offer great opportunities among institutions and companies. The book chapter reveals the requisite conditions to select the most appropriate contractor, and some of these conditions are unchanged, whereas, some are changed, and these conditions may likely be altered depending on the peculiarity of the project to be handled.

### **1.1 Tendering: traditional perspective**

Tendering has been popularly recognized across the globe as one of the most significant approaches of awarding public and private contracts and the approach guarantees a desired outcome between public or private institutions. An effective bid management and tender process provides a positive evaluation approach and leads not only to the appointment of appropriate contractors, but to also ensure that the ongoing relationship is mutually beneficial. A tender is a submission made by a prospective contractor in response to an invitation to bid. It makes an offer to supply goods and/or services. As the procurement routes have become more complex, tenders may seek for wide range of goods and services (for example, on construction management contract, works are constructed by a myriad of different brand of contractors, each sub-contracted to a client) and the contractors may continue in additional roles such as designs, supply, and management. However, the comparison between types of tendering in international countries with their meaning, are explained below:

*Utilizing e-Tendering in the Procurement of Construction Projects DOI: http://dx.doi.org/10.5772/intechopen.107211*

### **Open tender:**


### **Restricted tender (selective tender):**

• Turkey

### **Negotiated tender:**


### **Single-stage and two-stage tender:**

• Iraq

Furthermore, the reason of tendering is to evaluate and analyze the technical ability, competency of a tenderer or a contractor in an uncompromised means. Hence, to select the best tenderer or contractor, there are a number of traditional tendering approaches utilized in the construction industry. Based on the nature of the project, the clients can choose what type of tender will be used. Enlisted below are a number of them with lucid discussions.

### **2. Open tender approach**

Open tendering is the main tendering approach employed by both government and private sectors. Open tender allows anyone to make supply of goods and services required and offers equal opportunity to any organization to submit their bids. This offers the highest form of competition among contractors and holds the promise of creating new opportunities for new or emerging contractors. Hence, is the most widely used tendering approach for government projects. They make use of adverts, displaying the type of project, scope and some important information in an attractive manner. The tenderers or contractors who are attracted by the advert, will then apply by submit a bid for it. The steps have a number of issues and it does not provide assurance of good quality job. Meanwhile, in preparing this particular type of tender, a lot of losses is usually incurred. This has greatly discouraged it usage by so many stakeholders in the construction industry.

### **Advantages of Open Tendering Approach**


### **Disadvantages Of Open Tendering Approach**


### **3. Restricted tender (selective tender) approach**

The restricted tender or selective tender only permits contractors to submit tender, strictly by invitation. These contractors are those who are known by their track records to be suitable for a contract of that size, nature, and complexity required. Selective tender gives greater confidence to clients, that their requirement will be satisfied. Hence it could exclude upcoming contractors or those trying to establish themselves in the business. Furthermore, the contractor is usually saddled with two major responsibilities, viz.: all the necessary designs and the execution of the project. The services here, are rendered with high professional prowess. Again, there's usually a consultant hired by the employer, to ensure that proper constructing measures are observed, including health and safety measures. However, a certain amount of money must be paid in order to execute the project till the finishing stage, based on the terms and conditions of the contracting parties.

### **Advantages Of Selective Tendering**


### **Disadvantages Of Selective Tendering**


### **4. Negotiated tender**

The negotiated tender is mostly utilized in the engineering and construction industry, starting from tendering, until all disputes are resolved. Negotiating with a single contractor may be appropriate for highly specialist contracts. Cost is usually mitigated and it permits early contractor engagement. However, since the contractor is part of the project team at the beginning stage of the project, this will guarantee seamlessness in communication and information flow among the contracting parties. This approach of tendering, is more radical, when compared with the other approaches. Here, the negotiation cuts across the traditional processes and it best suits with procurement strategies. They are mostly used for specialized works such as unmanned aerial vehicle (UAV), elevators, and special access control systems. Hence, these kinds of works can only be done by unique contractors.

Furthermore, in such a contract, the clients demands that the tenderers or contractors gets to submit bids for the contract. The price of executing the contract is negotiated before its approval and awarding. If the contractor succeeds in getting the job, and the client is impressed with the quality of work done, more works will be awarded to the contractor based on the agreed price. This approach focuses on developing a good working relationship between the contracting parties, which will be good for the project.

### **Advantages Of Single-Stage Selective Tendering**


### **5. Single-stage selective tendering approach**

In the single-stage selective tendering approach, just a few tenderers or contractors are chosen by the client. If the client is a type that builds frequently, he will have an approved list of contractors except he wants to use other contractors outside his usual list, of which their work profile speaks volume to their competence and abilities.

### **Advantages of Single-stage selective tendering**


### **Disadvantages of Single-Stage Selective Tendering**


### **6. Two-stage selective tendering approach**

The two-stage selective tendering is also considered as negotiated tendering. In this approach, the client takes the contractor's service as advice instead awarding the design and project for him to execute. The two-stage selective tendering comprises of two stages.

1st: This step involves the selecting of a competent contractor and determining the price levels using the collected information. Hence, the information should be viable enough to make any informed decision.

2nd: Here, the chosen contractor will be mobilized to commence with the production of the working drawings. The documentation process of the contract is done after all necessary bills has been agreed upon.

### **Advantages of Two-Stage Selective Tendering Approach**


### **Disadvantages of Two-Stage Selective Tendering Approach**

• The risk involved in two-stage selective tendering is relatively high.

### **6.1 Tendering processes**

Across the globe, public institutions, are the major clients in the construction sector. A client is considered as one who has the seal of ownership of a project. The contractor is considered as the one who provides technical services or the tenderer. While, the consultant is considered as an information buffer. Conceptualization is the first stage is taken into account, when a client has in mind to carry out a construction project. Here, the client gets to brainstorm; on the kind of project, he will want to embark on, after which, he now mobilizes a consultant to adequately prepare the tender requirement/specification by carrying out a lucid feasibility study of the project. The first approach deployed is the pronouncement made by the client within a particular time-frame, by means of online adverts, magazine/publications, including the mass media. Furthermore, the contractor who get interested in the advertisement, then proceeds to purchase the tender document, thus submitting the requisite information needed, on or before the deadline for submission. Below, is an overview of tendering process in the construction industry, with respect to clients, consultant and contractor perspectives.

**Figure 1** above shows a representation on how the traditional tendering process in the construction industry operates. The traditional tendering process is usually carried out between the client (s), consultant, and the contractor (s). The blue boxes displayed, represent the sequential steps or procedures directed by the arrows for an effective tendering process, while the boxes displayed in white, either indicate the interest of tenderers after viewing the tender document (yes or no) or if they prequalify or qualify to be shortlisted for the awarding of the contract after they have submitted their bids. The aforementioned tendering approaches explained and processes demonstrated in **Figure 1**. from project conceptualization to project awarding, is being practiced in so many countries of the world today.

However, the speedy rate at which the world is changing, with a lot of uncertainties, the construction industry and its participants have to be innovative in their thinking, having an understanding of the changing environment, identifying the opportunities, and increasing its chances of relevance through digitalization and automation, so as to expand the efficiency and productivity of the industry. Thus, the Utilization of e-tendering to disseminate the information of a project - from inception, design, bill of quantity (BOQ ), and project schedule, through construction, and into operation of the project – will serve as the compass to great efficiency being gained for all the contracting parties.

*Utilizing e-Tendering in the Procurement of Construction Projects DOI: http://dx.doi.org/10.5772/intechopen.107211*

### **Figure 1.**

*Overview of tendering process in the construction industry, with respect to clients, consultant and contractor perspectives.*

### **7. Electronic tendering**

Technology is rapidly disrupting all spheres of endeavors. The most likely limitation to this disruptive technological force could be the people and the processes themselves. Adopting ICT in practice and day-to-day endeavor will help boost employees' technical capacities. However, upon critical examination and practicable observations in the construction industry, there is need to integrate the actions of the entire construction tendering into an electronic system in order to achieve optimality in project tenders, efficient time management, reliable procurement scheme, and seamlessness in overhead operations. Other benefits involved the reduction in printing and copying costs, halved the total costs on telephone between the owner and contractors. According to [1] they concluded that use of electronic system explains nearly 69% of the variance in transparency, 87% in service performance, 79% in efficiency and 67% in information quality. Thus, it can be concluded that the highest success in achievements is on the improvement of service performance, followed by efficiency, transparency and information quality. The results also show that user attitude has a direct influence on the system usage. Thus, the electronic tendering system will increase the profitability index of organizations, more efficient for all expert in the industry, and reliability will be guaranteed. However, electronic tendering is a unique methodology of dispatching a demand for relevant information and costs to tenderer and getting replies through utilizing the technology of the Internet or the preparation, publishing and receipting of tender information, getting tender documents, indicating interest in tendering, and willingness to purchase tender documents and finally selecting of a tenderer through the application of the internet is termed electronic tendering.

The Construction industry and its professionals should be acquainted with the robust benefits and the advantages of e-tendering through many legendary success records. Howbeit, when novel processes are launched in organizations, it is only normal for employees to panic because the security of their jobs may no longer be guaranteed; employees will shy from responsibility and during process alterations [2, 3].

Moreover, [4] studied e-tendering in China and discovered that the understanding of e-tendering among management team, political and institutional support, are required for e-tendering implementations, but are not the only factors needed to achieve success. The extent of development in e-tendering within the public sector does not necessarily measures up with the extent of development of these countries. [5] aimed to establish the e-tendering practices employed by Kenya Revenue Authority (KRA), and to establish the factors influencing application of e-tendering at KRA. He arrived at the result that understanding the e-tendering concept was a bit uneasy for senior management staff and team members. The issues range from fear of making errors, a lack of confidence, lack of technology and innovation champions within the organizations, in terms of factors, he found that the factors considered to affect e-tendering implementation at KRA include organization readiness, the capacity of the firm, and the risk implication.

The reason for the increasing degree of systems collapse, could be traced from employers and employees technical background and IT exposure. They are more related with the organization's 'Digitech' abilities: which includes thorough grasp of complex machines operations, and software application etc. Therefore, the deficit in Digitech abilities will impede the potentials of the organization to flourishingly assimilate IT into its oeuvre operations. IT being an enviable tool, in many domains, is considered by various management class or stakeholders of organizations as a means of reducing cost and handling time overrun, which is usually championed

### *Utilizing e-Tendering in the Procurement of Construction Projects DOI: http://dx.doi.org/10.5772/intechopen.107211*

and supervised by IT professionals. Organizations should eschew adopting novel technology into the present processes, but should rather give space for the already available technology to be assimilated into the present organizational processes. Sudden process alterations could override existing organizational processes, hence, impeding the organizations' growth. They will be a need for employees to adjust in the way they have previously carried their work in order to cope with novel technologies. On the process of adjusting, employees may grow weary; leading to job dissatisfaction and discontentment, low morale and little or no motivation etc. [6]. This provides an insight that organizations are to possess the requisite technical competencies to man the challenges that competes with easy assimilation of IT-enabled innovations and business improvement into its oeuvre practices. People will be major determinant in determining the success or failure of the utilization of e-tendering in procurement. When employees become receptive to change, there will be great enthusiasm and aspiration to harness new opportunities. The altitudes of employees towards e-tendering can be mirrored into the Maslow's hierarchy of needs [7] – the individual process; the interpersonal process; the organizational structure and dynamics.

### **Possible advantages that can be drawn from utilizing electronic tendering in the procurement process viz:**


Utilizing e-tendering, poses a strong stimulation to advance from the traditional system of tendering operations to a virtual system of tendering operations, where employees are going to be thoroughly equipped with digital skills and system functionalities, so as to produced optimal results from the e-tendering services and operations.

### **7.1 Statistical analysis of the questionnaire data**

We adopted, the problem-solving approach of data collections. The research was design to state clearly some specific factors with respect to the contractor's portfolio. The research strategy used for this book chapter was a combination of both quantitative and qualitative research along with attitudinal research strategy. The population comprised of registered construction professionals such as Architects, Builders, Quantity surveyors and Civil Engineers, based on their financial capacity and random sampling. These contractors are selected as a result of the book chapter's main aim of utilizing e-tendering in the procurement of construction projects. For this purpose, the data were collected through questionnaire, we also had series of interviews on e-tendering in construction with other contractors. The questionnaire was divided into two (2) sections. Section A contained personal information of respondents,


### **Table 1.** *Shows results of the questionnaire.*

Section B factors to be considered in the contractor's portfolio in Utilizing e-tendering in the procurement of construction projects. A total of 30 questionnaires were distributed and were returned, fully completed without mistake, which is sufficient for this book chapter. The questionnaire was analyzed using SPSS v21.0. which has been described as a software package used in the statistical analyzes of data. The e-tendering system being developed will be a web application that can be accessed from online browsers connected to the internet **(Table 1)**.

### **8. Results and findings**

This section reveals the result and findings from the returned questionnaires from the construction professionals namely: Architects, Builders, Quantity surveyors and Civil Engineers. The stated specific factors with respect to the contractor's portfolio are justified as follows:

From the feedback gathered, the construction professionals focused on the most critical issues that should be taken into cognizant in the process of e-tendering in the contractor's portfolio. The first twelve (12) respondents had similar points of view, having stated, that the company is supposes to maintain a positive financial stand and avoid all potential losses in factor five (5). Meanwhile, the second respondents, which were nine in number (9), commented on factor 6 and 7 as an effective means for tracking successful project delivery. The third respondents had an insightful view on factor 14 and 15, stating that some of the major construction machines and equipment, may not necessarily be owned by the contractors, but can be rented, when needed. Generally, apart from the fact that factors 1,2,3,4,5,6 and 8 are the constant or are the permanent criteria in the small bid document, the construction professionals were in full agreement with these factors as part of the contractor's portfolio. Again, the factors 9,10,11, and 12 are flexible or non-permanent conditions, which slightly have mean values less than 7, are to be use in the design of the e-tendering system, depending on the kind of project to be handled. Moreover, factors 13,14, and 15 that has mean values <6, were also considered by the authors to be adopted the e-tendering system, as they were conditions in the small bid document.

### **8.1 The e-tendering system**

The e-tendering system will consist of four different levels or stages, which are further grouped into the permanent and non-permanent sections. The levels involved in the permanent section for all the necessary projects and tenders, viz.; the first and third levels, whereas the non-permanent section viz. the second and fourth level, which is subject to change depending on the kind project to be handled (**Figure 2**).

### **8.2 The e-tendering system procedures**

The e-tendering will consist of five levels which are:


**Figure 2.** *Various arms of the programme.*


### **8.3 Standard bidding documents**

The authors, considered rendering an insightful perspective to their readers about the standard bidding document, before continuing with the program explanation, as it has significant roles to play in the program development.

The SBDs are controlled steps or procedures of arranging the procurement process, which are used to obtain a unified and easy-to-filter tenders, and determine the most appropriate in terms of technical offer and the lowest in terms of financial offer.

The standard documents are 18 in number. Therefore, each of the document is utilized for a particular type of project, requested by a client. But in peculiar cases, like projects in the construction sector, the public works document (PWD) is utilized a lot, which is broken down into three kinds of sub-documents:


• Works document for large projects for projects with a budget 6–10 trillion of and above.

In this book, the authors considered the first type of documents. The small document consists of necessary 7 parts, with brief definition of each part **(Table 2)**.

### **8.4 Basic components for the levels**

### **A. The first level component viz:**

• Registration and prequalification of the contractors.

### **B. The second level components viz**:


### **C. The third level components viz**:

• the criteria that are needed in the SBDs for small oeuvre which are to be handled by the client according to his specifications and requirements under the limitation of the tender, and these criteria viz.:


### **Table 2.**

*Sections of the small bidding document (SBDs).*

• The experience;

A minimum number of at least (2) similar contracts specified that has been satisfactorily and substantially completed as a prime contractor, joint venture member, management contractor or subcontractor, within the last two or three years, according to the form\*.

• Financial situation:

The financial status of the contractor will reflect the funds required to have been gotten by the contractor in order to champion the proposed project. Furthermore, the minimum average annual returns to have been generated by a prime contractor, joint venture member, management contractor or a subcontractor is a minimum of 50,000,000 million naira, calculated as total certified payments received for contracts in progress or completed with the last three years, still according to the form\*.

• Machines and work tools

Here, contractors will authenticate their ownership of capital-intensive machines and work tools or upload scanned receipts of the hired machines and tools that will be use; these machines and work tools is to be shown in table containing the machines and work tools, type, specifications, and required number. Contractors will also have to give extra info of the intended machines and tools that are to be use during the execution stage of the contract in the tender form\*.

• Work force/staffing

Here, contractors will give explicit details of the workforce to be deployed in the execution of the contract, thus stating, their past work experiences and where it was done, according to the forms\*.

### **D. The fourth level component viz;**

• Contract awarding

The fourth level represent the report of awarding the contract which will be mailed to the merited contractor or contractors. Mails will also be sent to other contractors, suppliers who did not merit the awarding of the contract, so as to pacify them, in hope that they stand another chance of meriting subsequent projects as the need for development arises within institutions, Governments etc.

The e-tendering system is being modeled particularly for projects with a budget within a trillion (1000000000000) naira. However, if the contractors do not adequately prepare and upload complete tenders, the e-tendering system will instantly disqualify the contractors and exonerate tender documents at the second and third level. The success or pass of any tender is dependent on the fulfillment of the criteria and factors which have been derived from the technical offer. However, the e-tendering system is to choose one offer from many successful tenders, and the tender that is chosen will be the tender with the least financial offer, and with the shortest possible duration to complete the project.

### **9. Conclusion**

Summarily, the book chapter shows the importance of Utilizing e-tendering system for tendering purposes in the procurement of construction works. The importance of electronic tendering needs not be over emphasized. Though country like Saudi Arabia introduced it but failed to complete at a particular point, countries like Korea and Malaysia were successful and are progressing.

The book chapter was set to promote faster tendering process, reduction in the use of paper, ease of documenting transactions, increased level of accountability, ease of accessibility to tendering documents, increased level of transparency in processing, reduction in cost of tendering, increased competition among tenders, increased innovation and creativity and above all to reduced corruption. Again, the book chapter was able to determine the requirements needed in the contractor's portfolio.

It has been well examined that, migrating to e-tendering of project procurement, will reduce the cost implication of tender, therefore mitigating the time consumed in the process because the system should function within 24 hours. Again, to effectively adopt the e-tendering system, organizations must be ready to change, the employees should have enough courage to adopt the system, and there is a need to have at least one person to play the defining role of a champion. Finally, the features of the e-tendering system and its terms of reference is being developed and will soon be practice in the Federal University of Technology Owerri (FUTO), a Nigerian university. We recommend adoption of the e-tendering system for other organizations operation, and confirm that the data taken and analyzed are correct, precise and obtainable with the reality of present demands.

### **Acknowledgements**

Recognition and thanks are given to Dr. Ibeawuchi Echeme, Mrs. Chinwe C. Ezirim, Mrs. Pauline. C. Ndubuaku my mum, Mr. Richard Okefiena (Editor) Fredrick Jonathan, okwuobasi Christian and Onwuta Kingsley my colleagues for their support and guidance in the preparation of this study.

### **Conflict of interest**

The authors declare no conflict of interest.

### **Notes/thanks/other declarations**

The authors, implores construction practitioners to be innovative and to possess an evolving mind-set in the industry so as to influence the world positively. Let us consciously deploy operation "think and birth forth inventions". The authors are immensely grateful for the opportunity of contributing to the fourth industrial revolution: applications and perspectives. The authors which to contribute more. It's a thing of joy making significant impact globally. Thanks!

*Global Market and Trade*

### **Author details**

Nnadozie Godswill Ndubuaku\* and Godson Jerry Federal University of Technology Owerri, Imo State, Nigeria

\*Address all correspondence to: ndubuakugodswill@gmail.com

© 2023 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

*Utilizing e-Tendering in the Procurement of Construction Projects DOI: http://dx.doi.org/10.5772/intechopen.107211*

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## Section 2
